May 17, 2026

The most recent Nairobi Securities Exchange (NSE) Initial Public Offer (IPO) was in January 2026, when the Kenya Pipeline Company issued an IPO managing to raise Kshs 112.4 bn against the target of Kshs 106.3 bn, 105.7% success rate. This marked the end of an 11-year IPO drought at the bourse, with the previous IPO having been in 2015 when Stanlib Investments launched the first Real Estate Investment Trust (Fahari I-REIT) at the NSE. The issue raised Kshs 3.6 bn against a target of Kshs 12.5 bn, translating to a 28.8% subscription success rate. Currently, the bourse has 69 listed securities with a total market capitalization of Kshs 3.4 tn as at 15^th May 2026. The bourse continues to be Safaricom-dominated, with Safaricom’s market capitalization of Kshs 1.2 tn equivalent to 35.3% of the entire market capitalization. Additionally, Safaricom (35.3%) and Banks (42.0%) make up 77.3% of the total bourse, leaving all other local sectors to share the remaining 22.7%, as of 15^th May 2025. The Capital Markets Authority (CMA) raised concerns that Kenya has been unable to achieve its projected listings targets as articulated in its Capital Markets Master Plan released in 2016 which envisioned at least four listings on the NSE every year; by its own masterplan CMA is now behind by 28 listings. To cure for this, the President in September 2022 set a target of 10 listings in one year, however this has not been achieved as of 2026. The chart below highlights the composition of stocks at the Nairobi Securities Exchange;

Source: Cytonn Research, NSE

Given that a few large cap stocks, namely Safaricom PLC, Equity Group Holdings, KCB Group Ltd and EABL hold almost 55.5% of the total market capitalization, the market remains volatile, which presents a risk of a market collapse due to concentration risk.

It is important to note that capital markets development is crucial for the growth of the Kenyan economy for several reasons; Firstly, the capital markets increase the proportion of long-term savings (pensions, life covers, etc.) that is channeled to long-term investment. Capital markets enable the contractual savings industry (pension and provident funds, insurance companies, medical aid schemes, collective investment schemes, etc.) to mobilize long-term savings from small individual household and channel them into long-term investments. In this way, the capital markets enable corporations to raise funds to finance their investment in real assets. In addition, capital markets development increases the efficiency of capital allocation. Efficient capital allocation means that funds are allocated to the investment projects or firms that bring the most value to the economy; the marginal product of capital value is the highest.

Given the significant role that the capital markets play, we shall then focus on Unlocking Kenya’s Capital Markets as an advancement to our previous report. As such, we shall cover;

1. Current State of the Nairobi Securities Exchange (NSE),
2. Current State of other Components of the Kenya Capital Markets,
3. Challenges facing Kenya’s Capital Markets, and,
4. Recommendations and Conclusion.

Section I: Current state of the Nairobi Securities Exchange

A.          The Structure of the Nairobi Securities Exchange

Based in Kenya, the Nairobi Securities Exchange is one of the leading securities exchanges in Africa. It was founded in 1954 in order to facilitate the trading of financial products through the provision of a trading platform for listed securities. The NSE was demutualized and listed in 2014 and it operates under the jurisdiction of the Capital Markets Authority (CMA) of Kenya and is charged with the responsibility of developing the securities market and regulating trading activities. In addition to developments covered in our previous report, below are the most recent ones:

1. The Capital Markets Authority, On 23^rd Juned 2025 announced the suspension in trading of Transcentury Plc and East African Cables Plc after the two companies were placed under receivership by Equity Bank over an unpaid debt of Kshs 4.7 bn
2. NSE on 16^th July 2025 announced the listing of Satrix MSCI World feeder ETF at a price of Kshs. 761 per unit. The Satrix MSCI World Equity Feeder ETF, listed on the Johannesburg Stock Exchange (JSE), is an index tracking fund registered as a Collective Investment Scheme. The mandate of the Satrix MSCI World Equity Feeder Portfolio ("Satrix MSCI World ETF") is to track, as closely as possible, the value of the MSCI World Index in ZAR.
3. NSE on 24^th July 2025 announced the listing of Shri Krishana by introduction. 50.5 million shares were offered at Kshs. 5.9 per share valuing the transaction at Kshs 298.0 mn
4. Nairobi Securities Exchange (NSE) announced the introduction of single unit trading system effective 8^th August 2025 which allowed the buying and selling of shares in single units. This milestone was part of NSE’s broader initiative to improve access to investment opportunities at the NSE. By enabling single-unit trading, the NSE provided greater flexibility for investors, reduced entry barriers, and encouraged wider participation, particularly from retail investors who have previously found it difficult to invest due to high minimum trade sizes.
5. On October 1^st 2025 NSE announced the launch of its Banking Sector Index, a market capitalization-weighted and float-adjusted benchmark designed to provide investors with a transparent and reliable measure of the performance of the banking sector.
6. On 9^th March 2026 the Kenya Pipeline Company (KPC) was officially listed on NSE through Initial Public Offer (IPO) after achieving a 105.7% oversubscription and raising approximately Kshs. 112.4 bn.
7. We also expect the listing of 2^nd Tranche of KMRC Medium Term Note and I&M Bank Medium Term Note if successfully subscribed.

Following the implementation of the Capital Markets (Public Offers, Listing and Disclosure) Regulations, 2023, the Nairobi Securities Exchange (NSE) officially restructured its market segmentation framework after receiving formal approval from the Capital Markets Authority (CMA).

The reclassification marked a significant regulatory milestone aimed at simplifying issuer obligations, enhancing investor clarity, and aligning the Exchange with international standards for capital markets structure. The table below show the reorganization under the new structure.

Source: Cytonn Research, NSE

The reclassified framework now comprises:

1. Main Investment Market Segment (MIMS) – For established entities (both equity and fixed income)
2. SME Market Segment – For small and medium-sized issuers, including equity and debt instruments

This restructuring is intended to:

1. Streamline listing procedures by eliminating outdated or redundant market categories
2. Improve issuer visibility through a simplified two-tier structure
3. Enhance investor understanding of the risks and profiles associated with listed firms
4. Encourage SME listings through a more inclusive and supportive regulatory framework
5. Align Kenya’s capital markets with best practice standards, increasing regional and global competitiveness

The tables below show the market overview following the segment reclassification

Equities Market:

Fixed Income Market:

 *As of July 2025

B.          Types and Requirements of Listings

Securities may be admitted to listing at the exchange through the following methods;

1. Initial Public Offer (IPO): This is the most common type of listing. It involves a company issuing new shares while listing on the selected stock exchange that will result in a new set of shareholders from the public buying the shares at a specified share price, and hence the company raising capital from the exercise. Key notable examples include KPC IPO in 2026, NSE IPO in 2014 and the Safaricom IPO in 2008
2. Listing by Introduction: This type of listing occurs when a company takes its existing shares and lists them on an exchange. Since only existing shares are listed by introduction, it follows that no new shares will be issued and no additional funds will be raised. This type of listing only provides the company with a regulated environment within which to operate and a platform to trade shares with public investors in the capital markets. The recent listing by introductions at the bourse was the listing of the Local Authority Pension Trust (LAPTRUST) Imara Income Real Estate Investment Trust (I-REIT) under the Restricted Sub-Segment in December 2022. LAPTRUST held 100.0% of the Imara I-REIT shares with no initial offer to the public,
3. Cross Listing: This occurs when a company that is already listed on one stock exchange decides to list on another stock exchange other than its primary or original exchange. Cross-listing is advantageous in that it gives the listed company a larger scope of access to capital from different jurisdictions and different investors. No new shares are issued. Atlas managed the first cross-listing between the London Stock Exchange and the NSE raising Kshs 450.0 mn, by offering 10% of its 393.9 mn total issued shares for cross-listing on the NSE at a price per share of Kshs 11.5 with a minimum subscription of Kshs 1.0 mn per investor, and,
4. Reverse Listing: This is a rare kind of listing strategy also referred to as back door listing where a company that is not listed on any exchange purchases a listed company and becomes automatically listed by virtue of this transaction. It is common when a company that wants to have access to the capital markets also wants to avoid the time and cost spent in a regular listing. The listing of I&M Bank for instance, was through the reverse acquisition of City Trust Limited (CTL) in 2013.

As above mentioned, the NSE is categorized into different market segments approved by CMA. The segments as stipulated have different eligibility, trading restrictions, and disclosure requirements, prescribed by CMA that companies planning to publicly offer shares through listing have to abide by. Below is a summary of those requirements:

Source: NSE

C.          Reasons for the low number of listings

This year, Kenya completed the KPC IPO bringing an end to an 11 year drought since the last time it recorded an IPO was in 2015 when Stanlib investments issued an IPO of the first Real Estate Investment Trust (Fahari I-REIT) at the bourse, which raised Kshs 3.6 bn against the target of Kshs 12.5 bn. Key to note that even though the KPC IPO was finally oversubscribed, at the end of the initial offer date it was undersubscribed forcing extension of the offer. Some of the key issues we believe the Authority needs to undertake in order to attract more IPOs are as follows:

1. Shallow market: The Nairobi Securities Market is regarded as a shallow market since it only offers few instruments and limited liquidity, leaving firms with minimal financing options. The strength of securities markets that make them crucial in the growth of an economy, is their capacity to mobilize long-term savings for financing long-term projects and encourage broader ownership of firms. The intermittent trading of only a few stocks held by a small number of investors makes the NSE less efficient. In comparison to other nations like South Africa, which has a total of 274 listed companies, NSE still lags behind having only 65 listed companies. Moreover, the market still lags behind in terms of liquidity due to overreliance on a few stocks thus discouraging listing as companies with the potential to list stay away out of fear of having failed IPOs,
2. Rigid regulatory framework: The regulatory structure in Kenya’s capital market has been a key impediment to the penetration of capital market products as well as the introduction of new IPOs. The current regulations governing the capital markets securities, public offers, listing, and disclosure is the Capital Markets Regulations Act 2002 do not meet the needs of the ever-evolving market. However, the authority announced that is fast-tracking reforms to update the regulations and has issued the Draft Public Offers, Listing and Disclosures seeking to address emerging issues and market dynamics in order to provide a more enabling environment in the Kenya’s Capital Markets that will spur more listings in the Nairobi Securities Exchange. Moreover, costs associated with compliance with the regulatory and corporate governance framework requirements have been a barrier to potential companies going public. Additionally, most potential companies are reluctant to list since compliance with some of the regulations exposes the company to the public realm which they regard as a loss of competitive advantage,
3. The rise of Private Equity firms providing easily accessible capital: Kenya’s private equity sector has been thriving, with raising capital through private equity companies on the upswing, making companies shy from listing due to the readily available capital. According to the 2025 African Private Capital Activity Report, total volumes of private capital deals in Africa in 2024 rose by 9.2% to 530 from 485 in 2024, demonstrating the resilience and growth of private equity in the continent at large. Private equity funding is more appealing than public floatation for many companies primarily because it allows companies to stay private as they continue to finance their businesses for expansion thus preserving the kind of decision-making power of its shareholders that is typically lost when businesses seek public listing, 
4. Perceived high cost of listing: Most small and medium-sized companies shy from listing shares due to the perceived high direct cost in particular the annual listing fees of 0.06% of the market capitalization subject to a minimum of Kshs 200,000.0 and a maximum of Kshs. 1,500,000.0. Additionally, due to a lack of awareness, the small and medium-sized enterprises which are dominant in the Kenyan economy, depend mainly on bank loans despite raising capital through the capital markets being cheaper. According to a study by the CMA, the percentage cost of floating securities in the capital markets is comparatively lower than bank lending rates. Moreover, IPO costs have ranged from 1.9% to 10.6% from 2012-2016, with the floatation of Eveready at 10.6% being the highest while Deacons in 2016 at 1.9% being the lowest, compared to bank lending rates averaging at 15.1% as of February 2025 according to CBK. Additionally, compared to bank loans, which are annual costs over the tenure of the relevant loans, the cost of floatation is a one-off cost,
5. Size of companies: The Kenya economy is dominated by small and medium-sized companies, the perception that mature companies are the ones that are in good position to issue IPOs makes the small and medium-sized companies reluctant to list for fear of having unsuccessful IPOs. This is an indication that startup companies are not growing enough to the capacity that would make them attractive to investors during IPOs which is the main reason the informal sector still dominates the economy, and,
6. Loss of control: Many companies particularly those that are family-owned or closely held are reluctant to list due to fear of dilution of ownership as well as losing their voting control. The companies typically rely on bank finance to raise additional capital when required. Additionally, most companies avoid going public due to constant pressure from public shareholders. Unlike the original owners, public shareholders usually take a short-term position and they are more concerned with seeing constant rises in the stock's price so they can sell their shares for a profit.

D.          Performance of the Nairobi Securities Exchange

The Kenya's stock market experienced a notable turnaround in 2025, with the market witnessing a substantial gain of 49.3% in its all-share index (NASI) to 185.9 in December 2025 compared to the 124.6 recorded in December 2024. This gain was attributed to factors such as alleviated inflationary pressures with the average inflation for 2025 coming in 4.1%, 0.6% points lower than the 4.7% average in 2024, coupled with the 22.9 bps appreciation of the local currency which was slower compared to the 17.6% appreciation in 2024.

In 2026 YTD, NASI has gained by 9.8% to 205.6 from the 187.25 recorded on 2^nd January 2026.  This is attributable to gains recorded by large cap stocks such as Stanbic, Coop and DTB of 48.9%, 36.0% and 30.1%. Going forward, however, the escalation of conflict in the Middle East could introduce downside risks to the NSE outlook through higher global oil prices, renewed inflationary pressures and weaker foreign investor sentiment, potentially moderating the market’s bullish momentum

The chart below shows the performance trend of the Nairobi All Share Index over the last 5 years;

All these combined led to improved foreign inflows into Kenya’s domestic equities markets as investors were drawn by the improved investment opportunities. The improved macroeconomic outlook boosted investor confidence and positioned the market as an appealing frontier for capital allocation. Despite this, foreign investors remained net sellers for a fifth consecutive year with the net selling position however increasing significantly by 433.1% to USD 92.9 bn in 2025 from a net selling position of USD 17.4 bn recorded in 2024. This is because their investment decisions are influenced more by global capital allocation trends, liquidity considerations, and risk perception than by domestic improvements alone. Many international investors continue to favor higher-yielding or more liquid developed and emerging markets amid elevated U.S. interest rates, while Kenya’s frontier market status, relatively shallow market liquidity, and lingering concerns over public debt sustainability and fiscal pressures continue to weigh on sentiment. The chart below shows the net activity foreign positions over the last 5 years and 2026 YTD:

*2026 figure as of 14^th May 2026

The performance of Kenya's stock market relies significantly on a select group of key players, notably Safaricom, the nation's leading telecommunications company. Safaricom, a magnet for foreign investors, constitutes a substantial 34.3% of the index as of 15^th May 2025.

Section II: Current State of Other Components of Kenya’s Capital Markets

A.          Real Estate Investment Trusts (REITS)

Real Estate Investment Trusts (REITs) serve as pooled investment vehicles enabling individuals to invest in real estate ventures by purchasing units within a trust. Kenya adopted REIT frameworks in 2013, following the footsteps of Ghana and Nigeria, which implemented similar structures earlier.

However, the Kenyan REIT market has struggled to gain momentum since its inception due to several challenges. These obstacles include stringent requirements for trustees, which demand significant capital of Kshs 100.0 mn, limiting participation primarily to banks. Additionally, the process for REIT approval is protracted, and the minimum investment threshold of Kshs 5.0 mn acts as a deterrent for potential investors. Furthermore, there is a lack of awareness and understanding among investors regarding this financial asset class. Consequently, Kenya's REIT market capitalization remains notably lower compared to its counterparts in other regions. The underdeveloped capital markets in Kenya has continually failed to provide alternative means of financing Real Estate developments. Due to this, most property developers rely on conventional sources of funding such as banks, compared to other developed countries. As a result, Kenya’s REIT Market Capitalization to GDP has remained significantly low at 0.2%, compared to other countries such as South Africa with 4.7%, as shown below;

Source: European Public Real Estate Association (EPRA), World Bank, Cytonn Research

Most property developers in Kenya continue to rely on traditional funding sources, such as banks, unlike in more developed markets. Since the establishment of REIT regulations, four REITs have been approved in Kenya, all structured as closed-ended funds with a fixed number of shares. However, none of these REITs are actively trading on the Main Investment Market Segment of the Nairobi Securities Exchange (NSE). The ALP Industrial REIT was approved for listing on March 11^th 2026 becoming East Africa’s first Industrial and logistics REIT. It joined the LAPTrust Imara I-REIT is the only listed REITs in the country, quoted on the restricted market sub-segment of the NSE's Main Investment Market. It is important to note that Imara did not raise funds upon listing. The ILAM Fahari I-REIT, Acorn I-REIT and D-REIT are not listed but trade on the Unquoted Securities Platform (USP), an over-the-counter market segment of the NSE. Two Rivers Land Company (SEZ) has also  established the TRIFIC Green USD Income REIT (I-REIT) with a targeted dividend yield of 8.0% and expected to be listed on NSE on 23^rd June 2026.

The table below outlines all REITs authorized by the Capital Markets Authority (CMA) in Kenya:

Source: Nairobi Securities Exchange, CMA

B.          Secondary Bond Market

Activity in Kenya's secondary bond market improved significantly in 2025 with secondary bond turnover increasing by 68.4% to Kshs 2,536.4 bn from Kshs 1,505.9 bn in 2024, attributable to increased investor appetite for fixed income securities driven by the high interest rates. So far in 2026 activity in Kenya’s secondary bond market has been on an upward trajectory recording a 48.2% growth in Q1’2026 to Kshs 989.5 bn, from Kshs 667.8 bn in Q1’2025. The growth in activity can be attributed to increased market liquidity, as investor lock in the attractive rates in anticipation of further rate cuts as the yield curve normalizes. The charts below show the secondary market bond turnover and the yields on Kenya’s 10-year Government bond;

Source: NSE

This decline in yields reflects a significant shift in investor sentiment driven by successful debt management strategies through moves aimed at smoothing out the country's debt maturity profile and reduce refinancing risks. Additionally, the stronger Shilling, the stable inflation and improved foreign exchange reserves have collectively enhanced investor confidence, reducing the risk premium associated with Kenyan sovereign assets. Key to note is that currently there is renewed upward pressure on yields which might be caused by elevated government borrowing requirements alongside lingering inflation expectations caused by the increasing global fuel prices as a result of the Middle East war.

Section III: Challenges Facing Kenya’s Capital Markets

Despite the major advancements in the Kenya capital markets, Kenya still lags behind the capital markets of developed countries. This is evidenced by the low Kenya’s Mutual Funds/UTFs to GDP ratio that came in at 4.7% at the end of FY’2025, significantly lower compared to an average of 50.7% amongst select global markets an indication of a need to continue enhancing our capital markets. Additionally, Sub-Saharan African countries such as South Africa and Namibia have higher mutual funds to GDP ratios coming in at 61.5% and 43.1%, respectively as at end of 2020, compared to Kenya. The chart below shows select countries’ mutual funds as a percentage of GDP:

*Data as of December 2025

Source: World Bank Data

Some of the barriers that hinder the growth of the capital markets in Kenya include:

1. Restrictive regulatory framework - The current regulatory framework governing capital market securities, public offers, listing, and disclosure is established by the Capital Markets Regulations Act of 2002. However, it fails to adequately cater to the evolving needs of the market. In response, the regulatory authority has announced plans to expedite reforms aimed at updating these regulations. A Draft Public Offers, Listing, and Disclosures was issued to address emerging issues and market dynamics, with the goal of creating a more conducive environment for Kenya's Capital Markets. The objective is to encourage more listings on the Nairobi Securities Exchange. Additionally, the costs associated with compliance to regulatory and corporate governance requirements have posed a significant barrier for potential companies considering going public. Moreover, many potential companies are hesitant to list due to concerns that compliance with certain regulations could expose them to public scrutiny, potentially undermining their competitive advantage,
2. Unfavorable conditions for Private Offers - Unregulated markets operate under agreements between participating parties and thus lack oversight from a specific regulator. However, the offering process typically adheres to defined rules and guidelines. Regrettably, the expansion of unregulated products in Kenya's capital markets remains restricted due to the absence of regulatory backing. This situation has perpetuated the misconception that private offers pose safety risks, discouraging investor participation and constraining businesses from utilizing private offers to secure funds,
3. Dependence on Banks for Funding over Capital Markets - In developed economies, the majority of businesses secure funding through capital markets, where capital market financing comprises 60.0%, while funding via banks stands at 40.0%. However, in Kenya, the situation is reversed, with capital markets contributing only 5.0%, while banks account for 95.0%. Beyond the statistical data, there is a perception that banks, rather than capital markets, dictate the economic agenda, leading to an imbalance in their respective roles in driving economic growth. Additionally, inadequate knowledge among some investors and general public has led to less participation in the capital market and overreliance on bank funding,

Source: World Bank

4. Low Investor Participation - Despite efforts to promote investor education and awareness, there remains a significant portion of the population that is not engaged in the capital markets. Factors such as low financial literacy levels, cultural attitudes towards investment, and a preference for traditional savings methods contribute to this issue,
5. Challenges in the approval process for issuers and market participants - The expenses and intricacies involved in obtaining approval for issuing securities on the Nairobi Securities Exchange (NSE) have deterred potential issuers from participating in the capital market. The lack of clear process of adherence to the approval framework, creates delays and affects growth of the market. This is evident from the fact that only 62 companies have been listed on the NSE since its official declaration, and,
6. Previous corporate failures - Certain investors have experienced financial losses in the capital markets previously. This has resulted in a negative perception of the market for some, making it challenging for them to engage in new offerings should they arise.

Section IV: Recommendations and Conclusion

From the issues identified, we are of the view that the following should be done to facilitate growth in the number of new listings as well as development of Kenya’s Capital Markets:

1. Remove Specific Obstacles to Capital Formation from Capital Markets: Under-developed capital markets make it harder to develop pools of capital focused on projects, particularly in the private markets, to complement efforts by the government. In Kenya, the main source of funding for real estate developers is banks which provide close to 99.0% of funding as compared to 40.0% in developed countries. This implies that capital markets contribute a mere 1.0% of real estate funding, compared to 60.0% in developed countries. To increase funding from capital markets, we will need to open our capital markets from the current restrictive rules and regulations, which serve to constrain capital markets development. Specifically, we need to;

• Enable Unit Trust funds to have as many bank custodians as necessary to serve their clients,
• Reduce the minimum investment required for development REITs from the current Kshs 5.0 mn, which is too high given the current median income of just Kshs 50,000 per month,
• Expand room for private offers to increase the diversity of funding available in the market,
• Allow for specialized collective investment schemes so that investors can invest in funds focused on housing, as current rules only allow up to 25.0% investment into one asset class, and,
• Reduce the capital requirements for a REIT Trustee from Kshs 100.0 mn, which has limited the REIT trustees to less than 4 players.

2. Fast track Privatization of State-Owned Enterprises: In October 2023, the government published the privatization act of 2023 which sought to address the long processes of approval of State-Owned Entities (SOEs) for privatization and provide a new framework for the process. The act was declared unconstitutional by the high court last year a decision that was upheld by the court of appeal. The repeated legal setbacks highlight the need for a more robust and constitutionally sound approach to reforming the privatization process.
3. Mode of appointment of the Chief Executive Officer of the Capital Markets Authority: The current CMA Act states that the CEO shall be appointed by the Minister and shall hold office on such terms and conditions of service as may be specified in the Act. Given the importance of the capital markets and its role in supporting the growth of the economy, the appointment should be done by the President with the approval of the Parliament, similar to how the Central Bank of Kenya (CBK)’s Governor is appointed. Additionally, the Parliamentary vetting process will promote transparency as the capital markets players, investors and Kenyans in general will be able to participate in the appointment,
4. Promote investment in Small and Medium Sized companies with growth potential: Following the increasing number of Small and Medium Sized companies, financing them through the securities exchange is key to the growth of an economy. However, the challenge usually arises in onboarding investors who are willing to take the risk in these types of companies given some of them have low-profit history while others are less liquid. However, some of the ways that can be used to promote and expand small and medium-sized enterprises, include the introduction of tax incentives for investors willing to invest in small and medium-sized companies to facilitate financing and boost liquidity and growth,
5. Investor compensation levy for CIS and REITs: Investor compensation levy for CIS and REITs: An Investor Protection Fund, in relation to a financial market, is a fund consisting of contributions made by the market participants or financial levies by the market’s regulators. Its main purpose is to ensure the protection of investors' investments against the loss sustained or adverse impact of the breach on the person or persons claiming compensation or restitution. The solution is to stimulate capital markets as a complementary alternative to banking markets, and hence the intended revision of the current CIS regulations has come at an opportune time,
6. Market Transparency: The degree to which markets are transparent affects investors' decision making. Transparency of trading allows efficient price setting and thus increases confidence in the market. Therefore, it is key for the regulator to enforce measures that raise the level of transparency in the market in order to make it more attractive to investors. This will help to boost its liquidity and consequently attract potential companies who are reluctant to go public due to the inefficiency in the market,
7. Create a Culture of Participation in the Stock Market: It is essential to disseminate knowledge of having a candid stock market through a listing of more companies in order to broaden the financial markets. This can be implemented by having a specific day in a calendar for financial education where the general public is educated on the importance of investment and financial culture,
8. Improve Tax Incentives for New Listings: The authority needs to develop measures that are favourable to going public that will enable it to attract more companies and have a powerful and more developed securities market. In order to attract more listings, the authority needs to improve its tax treatments for dividends as well as capital gains,
9. Train and offer Independent and free assessment to companies: In order to attract more listings, the authority needs to offer training on matters of financial transparency, sustainability, and corporate governance to potential companies as well as offer free assessment in order to help them position themselves for transitioning to the public markets, and,
10. Simplify regulations and make it easier to access listing at the securities exchange market: The simplification of obtaining listing can encourage companies to go for listing at the stock market and take advantage of public finance in the market to gain size and boost growth than private financing through risk or venture capital. The general cost of listing should also be reduced in order to make it more favourable and appealing for IPOs.

We firmly believe that the implementation of these recommendations will not only address the current challenges hindering capital market growth but also pave the way for a more vibrant and resilient financial ecosystem. Additionally, they will help increase the market efficiency and consequently boost investors’ confidence. Having an active capital market is paramount for fostering economic growth, driving innovation, and enhancing financial stability. Vibrant Capital Markets are also key to attracting SMEs to the capital markets structure, given that they form the bulk of businesses in Kenya.

Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor.